B-180844, AUG 14, 1974

B-180844, AUG 14, 1974

1. CONTRACT AWARDED TO OFFEROR SUBMITTING LOWEST F.O.B. DESTINATION PRICE, WHICH IS QUESTIONED ON BASIS THAT EVALUATION SHOULD HAVE INCLUDED COST OF SHIPPING GOVERNMENT-FURNISHED BLACK POWDER AND ALUMINUM CANS, WILL NOT BE DISTURBED WHERE COST OF SHIPPING BOTH ITEMS TO SUCCESSFUL OFFEROR WAS LESS THAN COMPARABLE COST OF SHIPPING TO PROTESTER, COSTS OF SHIPPING ALUMINUM CANS WERE NOT INCLUDED IN EVALUATION SINCE SUCH COSTS COULD NOT BE REASONABLY DETERMINED, AND COSTS OF SHIPPING BLACK POWDER WERE IN FACT INCLUDED IN EVALUATION. MOREOVER, SINCE RFP DID NOT PROVIDE FOR EVALUATING SHIPPING COSTS OF CANS, IT SHOULD HAVE BEEN APPARENT PRIOR TO CLOSING DATE FOR RECEIPT OF PROPOSALS THAT SUCH COSTS WOULD NOT BE FILED UNTIL AFTER AWARD IS UNTIMELY. 2. RFP SHOULD HAVE CLEARLY STATED THAT COSTS OF SHIPPING GOVERNMENT FURNISHED BLACK POWER WOULD BE INCLUDED IN EVALUATING F.O.B. DESTINATION OFFERS; HOWEVER, THIS DOES NOT CONSTITUTE MATERIAL DEFECT SINCE EVALUATION OF THIS ITEM DID NOT AFFECT SELECTION OF SUCCESSFUL OFFEROR. 3.WHERE OFFERORS WERE CONTACTED AFTER SUBMISSION OF INITIAL PROPOSALS FOR PURPOSE OF MAKING CERTAIN CORRECTIONS OF GFM WHICH DID NOT AFFECT PRICE OR CONTRACT REQUIREMENTS, AWARD MAY NEVERTHELESS BE MADE ON BASIS OF INITIAL PROPOSALS UNDER ASPR 3-805.1(A)(V), SINCE RULE TO BE APPLIED IS SAME AS IN DETERMINING WHETHER CHANGE OCCURRING AFTER BEST AND FINAL OFFERS REQUIRES REOPENING OF NEGOTIATIONS AND IN THAT SITUATION IT HAS BEEN HELD THAT WHERE CHANGE DID NOT AFFECT RELATIVE COST STANDING OF OFFERORS, IT WAS NOT ABUSE OF DISCRETION FOR AGENCY TO DECLINE TO SOLICIT REVISED PROPOSALS. FURTHERMORE, SEE ASPR 3-805.1(B), WHICH AUTHORIZES CERTAIN INQUIRIES TO OFFERORS FOR PURPOSES OF CLARIFICATION WITHOUT INVOKING REQUIREMENT FOR NEGOTIATIONS WITH ALL OFFERORS. 4. ALTHOUGH PROTESTER WAS NOT ADVISED THAT PRICE REVISION SUBMITTED AFTER DATE FOR RECEIPT OF INITIAL PROPOSALS WAS LATE MODIFICATION, THIS IRREGULARITY DID NOT AFFECT VALIDITY OF AWARD AS IT DOES NOT APPEAR SUCH REVISION WAS CONSIDERED BECAUSE DECISION HAD BEEN MADE TO AWARD ON BASIS OF INITIAL PROPOSALS AND LOW OFFEROR REMAINED LOW EVEN AFTER PROTESTER'S REVISION. 5. AWARD OF ENTIRE QUANTITY OF ITEM TO ONE OF TWO MOBILIZATION BASE SUPPLIERS WAS NOT ABUSE OF DISCRETION SINCE THERE IS NO BASIS FOR QUESTIONING AGENCY DETERMINATIONS THAT QUANTITY WAS NOT LARGE ENOUGH FOR ECONOMICAL SPLIT BETWEEN TWO OFFERORS AND THAT SELECTED FIRM HAS CAPABILITIES TO MEET REQUIREMENTS OF MOBILIZATION BASE. 6. GAO DOES NOT FIND ANY VIOLATION OF ASPR 1-1504(A) WHERE PURSUANT TO SUCH REGULATION RECORD SHOWS THAT CONTRACTING OFFICER OBTAINED APPROVAL FROM HIGHER AUTHORITY FOR 300 PERCENT OPTION AND DETERMINED UNUSUAL CIRCUMSTANCES JUSTIFIED SUCH PERCENTAGE. MOREOVER, FACT THAT OPTION PRICE IS SUBJECT TO ESCALATION FOR LABOR AND MATERIAL COSTS DOES NOT INVALIDATE OPTION SINCE ESCALATION PROVISION DOES NOT VITIATE COMPETITIVE ASPECTS OF PROCUREMENT AND ASPR 1-1505(B) RECOGNIZES THE VALIDITY OF ESCALATION OF OPTION PRICES, SUBJECT ONLY TO CERTAIN DETERMINATIONS PRIOR TO EXERCISE OF OPTION AND ESCALATION OF PRICES.

ENSIGN BICKFORD COMPANY:

THE ISSUE IN THIS PROTEST IS WHETHER IT WAS PROPER TO AWARD A CONTRACT FOR A QUANTITY OF 822,450 MK 125 MOD 5 IGNITERS AND ASSOCIATED DATA FOR 2.75 INCH ROCKET TO BERMITE DIVISION OF WHITTAKER CORPORATION (BERMITE), UNDER REQUEST FOR PROPOSALS NO. DAAA09-74-R-0056, ISSUED ON JANUARY 21, 1974, BY THE UNITED STATES ARMY ARMAMENT COMMAND (ARCOM), ROCK ISLAND, ILLINOIS. FOR THE REASONS STATED BELOW THE PROTEST IS DENIED.

THE NEGOTIATING AUTHORITY FOR THIS PROCUREMENT WAS 10 U.S.C. 2304(A)(16) AND ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-216, WHICH PROVIDE FOR AN EXCEPTION TO ADVERTISING REQUIREMENTS FOR PURCHASES IN THE INTERESTS OF NATIONAL DEFENSE OR INDUSTRIAL MOBILIZATION. THE SOLICITATION WAS RESTRICTED TO THE TWO APPROVED IGNITER MOBILIZATION BASE PRODUCERS, ENSIGN BICKFORD COMPANY (EB) AND BERMITE. THE RFP REQUESTED PRICES F.O.B. ORIGIN AND F.O.B. DESTINATION TO BALDWIN ELECTRONICS INCORPORATED, EAST CAMDEN, ARKANSAS. THE CLOSING DATE FOR RECEIPT OF PROPOSALS WAS FEBRUARY 4, 1974.

EB AND BERMITE SUBMITTED PROPOSALS BY THE CLOSING DATE. BY TELEGRAM DATED FEBRUARY 28, 1974, RECEIVED BY THE PROCURING ACTIVITY ON MARCH 1, 1974, EB AMENDED THE PRICING SCHEDULE IN ITS INITIAL OFFER. IN THE COVER LETTER ACCOMPANYING BERMITE'S PROPOSAL CERTAIN QUESTIONS WERE RAISED WITH RESPECT TO THE CLASSES OF BLACK POWDER THAT WOULD BE GOVERNMENT-FURNISHED MATERIAL (GFM), AND WHETHER THE ALUMINUM CANS USED FOR SHIPPING THE MATERIAL WOULD BE FURNISHED BY THE GOVERNMENT. A REVIEW OF THE MATTER BY THE PROCURING AGENCY INDICATED THAT AN INCORRECT CLASS OF BLACK POWDER HAD BEEN LISTED IN THE RFP, AND THAT THE RFP INADVERTENTLY OMITTED ADVISING OFFERORS THAT THE ALUMINUM CANS USED FOR SHIPPING THE ITEMS WOULD BE GFM. EB WAS ORALLY ADVISED OF THESE CORRECTIONS ON MARCH 7, 1974, AND THEREAFTER TELEGRAPHIC CONFIRMATION WAS RECEIVED FROM EB THAT ITS PRICE WAS PREDICATED ON THE ALUMINUM CANS BEING FURNISHED BY THE GOVERNMENT. COMPARISON OF THE PROPOSALS SUBMITTED BY THE OFFERORS IS AS FOLLOWS:

OFFEROR UNIT PRICES

*F.O.B. *F.O.B.

ORIGIN DESTINATION

MOTOR RAIL

BERMITE $0.992 $0.995

EB (INITIAL) 1.255 1.264

EB (AS AMENDED) 0.990 .999

*(BASED ON WAIVER OF FIRST

ARTICLE TESTING)

THE CONTRACTING OFFICER REPORTS THAT BOTH FIRMS WERE CONSIDERED ELIGIBLE FOR WAIVER OF FIRST ARTICLE TESTING IN ACCORDANCE WITH THE WAIVER PROVISION IN THE RFP.

IN INITIAL PROPOSALS SUBMITTED BY EB AND BERMITE WERE REVIEWED BY THE ARCOM COST/PRICE ANALYSIS BRANCH AND ON FEBRUARY 20, 1974, A RECOMMENDATION WAS MADE TO AWARD THE CONTRACT TO BERMITE AT ITS PROPOSED F.O.B. DESTINATION PRICE OF $0.995 (BASED ON WAIVER OF FIRST ARTICLE TESTING) SINCE THERE WAS ADEQUATE PRICE COMPETITION AND BERMITE'S PRICE COMPARED FAVORABLY WITH PRICES IN PREVIOUS PROCUREMENTS. AS A RESULT OF THIS RECOMMENDATION, A DETERMINATION WAS MADE BY THE CONTRACTING OFFICER THAT THE AWARD SHOULD BE MADE ON THE BASIS OF INITIAL PROPOSALS WITHOUT FURTHER DISCUSSIONS. (PAGE 7 OF THE RFP ADVISED OFFERORS THAT AWARD MIGHT BE MADE ON THIS BASIS.) BERMITE WAS SELECTED AS THE SUCCESSFUL OFFEROR ON THE BASIS THAT ITS PRICE WAS LOW AND AN AWARD WAS MADE TO THAT FIRM ON MARCH 14, 1974. UNDER THE REQUIRED SCHEDULE, DELIVERIES ARE TO BE MADE BETWEEN MAY 31, 1974 THROUGH JANUARY 31, 1975.

EB ARGUES THAT ANY ADVANTAGE RESULTING FROM BERMITE'S F.O.B. DESTINATION PRICE WOULD BE MORE THAN OFFSET BY THE ADDITIONAL COSTS INVOLVED IN SHIPPING THE GFM TO BERMITE COMPARED TO WHAT THESE COSTS WOULD HAVE BEEN IF THE GFM WERE SHIPPED TO EB. IN THIS REGARD, EB ADVISES THAT SINCE 1,595 CANS OF THE TOTAL REQUIRED NUMBER OF 2,448 WERE ALREADY IN THE VICINITY OF ITS PLANT IN SIMSBURY, CONNECTICUT, THE GOVERNMENT WOULD NOT HAVE HAD TO INCUR ANY ADDITIONAL COSTS WITH RESPECT TO SHIPPING THESE CANS AND THAT THE REMAINING 853 CANS COULD HAVE BEEN SHIPPED FROM EAST CAMDEN, ARKANSAS, TO ITS PLANT AT A COST OF $1,069. EB COMPARES THIS TO A TOTAL COST OF $4,209 TO SHIP 2,448 CANS FROM EAST CAMDEN TO BERMITE'S PLANT IN SAUGUS, CALIFORNIA. EB FURTHER ESTIMATES THAT THE COST OF SHIPPING THE BLACK POWDER FROM THE POINT OF MANUFACTURE (PINE BLUFF, ARKANSAS), TO ITS PLANT, WOULD HAVE BEEN ABOUT $1,430 LESS THAN THE COST OF SHIPPING THIS ITEM TO BERMITE'S PLANT. BASED ON THESE ESTIMATES EB CONTENDS THAT THE TOTAL SAVINGS TO THE GOVERNMENT IN SHIPPING SHIPOING THE GFM TO ITS PLANT RATHER THAN BERMITE'S PLANT WOULD HAVE BEEN ABOUT $4,750 OR $0.0056 PER UNIT. CONTENDS THAT IF THIS SAVING HAD BEEN CONSIDERED IN THE EVALUATION, AS IT SHOULD HAVE BEEN, EB'S UNIT PRICE ON AN F.O.B. DESTINATION BASIS (WITH WAIVER OF FIRST ARTICLE TESTING) WOULD BE $0.0016 PER UNIT LOWER THAN BERMITE'S PRICE. EB URGES THAT THE AWARD TO BERMITE SHOULD BE CANCELED AND THE CONTRACT AWARDED TO EB.

THE CONTRACTING OFFICER'S REPORT STATES THAT THE COSTS OF TRANSPORTING THE BLACK POWDER WERE CONSIDERED IN EVALUATING EB'S AND BERMITE'S OFFERS AND IT WAS FOUND THAT THE COSTS OF TRANSPORTING THIS ITEM TO BERMITE'S PLANT BY MOTOR WERE LOWER THAN TRANSPORTATION COSTS FOR THIS ITEM BY EITHER MOTOR OR RAIL TO EB'S PLANT.

WITH RESPECT TO THE EVALUATION OF THE TRANSPORTATION COSTS FOR ALUMINUM SHIPPING CANS, THE CONTRACTING OFFICER'S REPORT STATES AS FOLLOWS:

"(1) *** AMMUNITION CAN SHIPPING COSTS WERE NOT EVALUATED. THESE COSTS CANNOT BE READILY ASCERTAINED BECAUSE OF THE MANY POTENTIAL POINTS OF ORIGIN FOR SHIPMENTS. THE PROCURING OFFICE DID NOT HAVE INFORMATION REGARDING THE POINTS OF ORIGIN AT THE TIME OF THE ISSUANCE OF THE SOLICITATION OR AT THE TIME OF EVALUATION OF OFFERS.

"(2) FURTHER, AN EVALUATION OF THE COSTS OF SHIPPING CANS (IF ONE WERE MADE) BASED ON THE FACTS ALLEGED BY ENSIGN BICKFORD WOULD NOT YIELD THE STATED RESULTS (PAGE 2 OF PROTEST LETTER). ALTHOUGH A QUANTITY OF 1,595 CANS WAS IMMEDIATELY AVAILABLE TO ENSIGN BICKFORD, THE COST OF SHIPPING THESE CANS WAS BORNE BY THE GOVERNMENT AT SOME POINT IN TIME. BERMITE HAD A QUANTITY SUFFICIENT TO COMPLETE DELIVERIES UNDER THE RESULTING CONTRACT ***. ONCE AGAIN, HOWEVER, THE GOVERNMENT HAS BORNE THE COST OF SHIPPING THESE CANS. AS STATED ABOVE, THE COST OF SHIPPING THESE CANS COULD NOT BE EVALUATED BECAUSE SUFFICIENT INFORMATION WAS NOT AVAILABLE. THE APPROACH TAKEN BY ENSIGN BICKFORD ASSUMES THAT THERE IS NO COST INVOLVED TO THE GOVERNMENT IF THE CANS ARE AVAILABLE AT A CONTRACTOR'S PLANT. USING THIS APPROACH, ENSIGN BICKFORD'S COSTS WOULD BE HIGHER BECAUSE OF THE NEED TO SUPPLY AN ADDITIONAL 853 CANS."

A MEMORANDUM OF A TELEPHONE CONVERSATION WITH THE GOVERNMENT'S CONTRACT ADMINISTRATOR AT BERMITE'S PLANT DATED MARCH 21, 1974, INDICATES THAT WHILE 1,595 CANS WERE SHIPPED TO BERMITE, MORE THAN AN ADEQUATE NUMBER OF CANS WERE AVAILABLE AT BERMITE'S PLANT TO FULFILL THE REQUIREMENTS OF THIS CONTRACT PRIOR TO THE RECEIPT OF THESE 1,595 CANS. ANOTHER DOCUMENT ENTITLED "DETAILS OF PROPOSED AWARD" STATES THAT SINCE THE AMMUNITION CANS ARE SHIPPED FROM PLANTS AND DEPOTS ALL OVER THE CONTINENTAL UNITED STATES, THE TRANSPORTATION COSTS CANNOT BE EVALUATED. ARMY'S POSITION IS THAT SINCE THE COSTS OF TRANSPORTING THE ALUMINUM CANS CANNOT BE REALISTICALLY DETERMINED, THERE WAS A JUSTIFIABLE BASIS FOR NOT INCLUDING THIS AS AN EVALUATION FACTOR. ARMY ALSO ASSERTS THAT SINCE EB DID NOT PROTEST THE FAILURE TO INCLUDE THE COSTS OF SHIPPING THE ALUMINUM CANS AS AN EVALUATION FACTOR PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS, THIS ASPECT OF EB'S PROTEST SHOULD BE CONSIDERED UNTIMELY.

WE BELIEVE THERE IS MERIT TO THE ARMY'S ARGUMENT THAT PRIOR PRACTICE SHOULD HAVE ALERTED EB TO THE FACT THAT IN THE ABSENCE OF SOME AFFIRMATIVE STATEMENT IN THE RFP, THE TRANSPORTATION COSTS OF SHIPPING ALUMINUM CANS WOULD NOT BE INCLUDED IN THE EVALUATION. THEREFORE, SINCE EB DID NOT PROTEST THE FAILURE TO INCLUDE THE SHIPPING COSTS OF THE ALUMINUM CANS AS AN EVALUATION FACTOR UNTIL AFTER THE AWARD WAS MADE, THE ARMY'S POINT THAT THIS ASPECT OF THE PROTEST IS UNTIMELY APPEARS MERITORIOUS. SEE B-180341, MAY 10, 1974. HOWEVER, SINCE THERE IS ALSO SOME VALIDITY TO EB'S ARGUMENT THAT IT WAS ENTITLED TO ASSUME THAT ALL COSTS WOULD BE CONSIDERED IN THE EVALUATION, WE BELIEVE THE MERITS OF THIS ASPECT OF THE PROTEST SHOULD BE CONSIDERED.

EB POINTS OUT THAT THE GOVERNMENT'S LOADING PLANT IN BALDWIN, ARKANSAS, IS THE SOLE SHIPPING POINT APPLICABLE TO ALUMINUM CANS. EB FURTHER STATES THAT NUMEROUS PREVIOUS GOVERNMENT PROCUREMENTS HAVE INCLUDED THE COST OF SHIPPING GOVERNMENT-FURNISHED AMMUNITION CANS IN THE EVALUATION. ADDITION, EB ADVISES THAT AFTER SUBMISSION OF OFFERS BUT PRIOR TO AWARD THE ARMY ORDERED THE SHIPMENT OF THE 1,595 AMMUNITION CANS IN ITS VICINITY TO BERMITE AT A COST OF $2,694, AND TO SUPPORT THIS CHARGE EB HAS FORWARDED A SHIPPING DOCUMENT DATED MAY 1, 1974. EB QUESTIONS THE NECESSITY OF SHIPPING THESE 1,595 CANS TO BERMITE AND ASSERTS THAT IF THE SHIPMENT OF THE CANS WERE UNNEEDED, THIS AT LEAST CONSTITUTES POOR PROPERTY ADMINISTRATION. WITH RESPECT TO THE TIMELINESS ISSUE EB CONTENDS THAT IT ASSUMED THAT ARMY WOULD CONSIDER ALL RELEVANT COST FACTORS IN THE EVALUATION AND SINCE IT COULD NOT PREDICT THAT GFM WOULD NOT BE INCLUDED IN THE EVALUATION, ITS PROTEST SHOULD NOT BE REJECTED AS UNTIMELY.

ARMY HAS CHECKED ITS FILE ON TWO PREVIOUS CONTRACTS FOR THE IGNITER MK 125 AND WE ARE ADVISED AS FOLLOWS:

"*** EVALUATION OF THE COST TO SHIP CLASSES 6 AND 7 BLACK POWDER WAS MADE PRIOR TO AWARD OF CONTRACT DAAA09-73-C-0170 TO BERMITE. HOWEVER, CAN SHIPPING COSTS WERE NOT INCLUDED. NO EVALUATION OF GFM SHIPMENT COSTS (CLASSES 6 AND 7 BLACK POWDER OR AMMUNITION CANS) WAS MADE PRIOR TO AWARD OF CONTRACT DAAA21-72-C-0810 TO ENSIGN BICKFORD COMPANY."

WITH RESPECT TO THE CONTENTION THAT BALDWIN IS THE CENTRAL SHIPPING POINT FOR AMMUNITION CANS, ARMY REITERATES THAT POINTS OF ORIGIN FOR SHIPMENT OF CANS WERE NOT READILY ASCERTAINABLE AT EITHER THE TIME OF EVALUATION OR THE TIME OF CONTRACT AWARD AND STATES THAT SINCE THE QUANTITY OF CANS IN POSSESSION OF A CONTRACTOR VARIES WITH THE PRODUCTION RATE OF THE CONTRACTOR, THE NUMBER OF CANS IN THE POSSESSION OF EITHER PROSPECTIVE CONTRACTOR WAS NOT KNOWN AT THE TIME OF EVALUATION. SUBSEQUENT TO EB'S PROTEST AND THE AWARD TO BERMITE, ARMY COUNTED THE NUMBER OF CANS ON HAND AT THE PLANTS OF BOTH OFFERORS WITH THE FOLLOWING RESULTS:

"*** AS NEARLY AS CAN BE DETERMINED, ENSIGN BICKFORD HAD A QUANTITY OF 1,595 CANS ON HAND VS. THE 2,174 CANS ON HAND AT BERMITE. THE BERMITE FIGURE HAS BEEN VERIFIED BY THE ACO WHO ALSO STATES THAT A QUANTITY OF 2,324 CANS WOULD BE REQUIRED FOR CONTRACT DAAA09-74-C 0092. ACCEPTING THE ACO'S REQUIRED FIGURE AS ACCURATE, ENSIGN BICKFORD WOULD NEED AN ADDITIONAL 729 CANS VS. AN ADDITIONAL 150 CANS FOR BERMITE. ***"

ARMY HAS CONFIRMED THAT THE 1,595 CANS AT EB WERE SHIPPED TO BERMITE FOR UTILIZATION BUT ARMY REPORTS THAT ONLY 150 OF THESE CANS WERE NEEDED.

THE QUESTION WHETHER TO INCLUDE THE COSTS OF SHIPPING THE GFM AS AN EVALUATION FACTOR IS A MATTER WITHIN THE DISCRETION OF THE PROCURING ACTIVITY AND AS SUCH WILL NOT BE QUESTIONED BY OUR OFFICE UNLESS IT IS SHOWN THAT THE DETERMINATION IS NOT REASONABLY SUPPORTED BY THE RECORD PRESENTED. WITH RESPECT TO THE ALUMINUM CANS WE FIND THAT THE RECORD SUPPORTS THE ADMINISTRATIVE POSITION THAT THE COSTS OF SHIPPING THE ALUMINUM CONTAINERS COULD NOT BE REASONABLY DETERMINED; THEREFORE, WE DO NOT FIND THAT THE FAILURE TO INCLUDE SUCH COSTS AS AN EVALUATION FACTOR WAS AN ABUSE OF THE ADMINISTRATIVE DISCRETION. SEE B-177861, JULY 13, 1973. MOREOVER, THE COST OF SHIPPING THE BLACK POWDER WAS INCLUDED IN THE EVALUATION AND WE HAVE NO BASIS FOR CONCLUDING THAT ARMY'S DETERMINATION THAT THE COST OF SHIPPING THIS ITEM FROM THE PLACE OF MANUFACTURE TO BERMITE'S PLANT WAS LESS THAN THE COST OF TRANSPORTING THIS ITEM BY EITHER MOTOR OR RAIL TO EB'S PLANT. ALSO, THERE IS NO BASIS FOR QUESTIONING THE FINDING THAT THERE WERE SUBSTANTIALLY MORE CANS AVAILABLE TO FULFILL THE REQUIREMENTS OF THIS CONTRACT AT BERMITE'S PLANT THAN AT EB'S PLANT. THUS, EVEN IF WE ACCEPTED EB'S CONTENTION THAT TRANSPORTATION COSTS OF SHIPPING THE CANS SHOULD HAVE BEEN INCLUDED IN THE EVALUATION, IT WOULD NOT HAVE RESULTED IN BECOMING THE LOW OFFEROR. WHILE A SUBSTANTIAL PORTION OF THE 1,595 CANS SHIPPED TO BERMITE MAY NOT BE USED IN CONNECTION WITH THE BASIC CONTRACT, THEY WILL BE AVAILABLE IN THE EVENT THE OPTION IS EXERCISED. IN ANY EVENT, REVIEW OF A PROPERTY ADMINISTRATION MATTER WOULD BE OUTSIDE THE SCOPE OF OUR FUNCTION IN CONSIDERING A PROTEST RELATIVE TO THE AWARD OF A CONTRACT. IN VIEW OF THESE CONSIDERATIONS, WE DO NOT FIND THAT EB'S CONTENTIONS REGARDING THE EVALUATION OF GFM CONSTITUTE A BASIS FOR DISTURBING THE AWARD.

WHILE WE BELIEVE OFFERORS WERE ENTITLED TO KNOW WHETHER THE COSTS OF SHIPPING THE BLACK POWDER WOULD BE INCLUDED AS AN EVALUATION FACTOR IN CONSIDERING F.O.B. DESTINATION OFFERS, AND THE RFP DID NOT SO PROVIDE, THE COSTS OF SHIPPING THE BLACK POWDER DID NOT HAVE ANY AFFECT ON THE SELECTION OF THE LOW OFFEROR; THEREFORE, WE DO NOT FIND THAT THIS DEFICIENCY CONSTITUTED A MATERIAL DEFECT. NEXT FOR CONSIDERATION IS EB'S CONTENTION THAT THE ARMY MAY HAVE VIOLATED ASPR 3-805.1(A) BY NEGOTIATING ONLY WITH BERMITE, AND ASPR 3-805.1(B) BY FAILING TO ESTABLISH A COMMON CUT-OFF DATE FOR NEGOTIATIONS.

THE CONTRACTING OFFICER CONCEDES THAT CORRECTIONS WERE DISCUSSED WITH THE OFFERORS CONCERNING INCORRECT IDENTIFICATION OF THE CLASS OF BLACK POWDER TO BE FURNISHED AS GFM AND THE INADVERTENT OMISSION OF SPECIFYING THE ALUMINUM CANS AS A GFM ITEM AFTER RECEIPT OF PROPOSALS. THE CONTRACTING OFFICER EXPLAINS THAT THESE CONTRACTS WERE FOR "CLARIFICATION PURPOSES ONLY" AND THAT THE "PRICES WERE NOT DISCUSSED AT ANY TIME. A LEGAL ANALYSIS IN THE ADMINISTRATIVE FILE STATES AS FOLLOWS IN FURTHER EXPLANATION OF THE EFFECT OF THESE "DISCUSSIONS":

"BECAUSE OF AN INADVERTENT FAILURE TO LIST THE AMMUNITION CANS AS ITMES OF GOVERNMENT EQUIPMENT TO BE FURNISHED, THE CONTRACTING OFFICER DID MAKE AN INQUIRY, *** FOR THE SOLE PURPOSE OF ELIMINATING THIS MINOR IRREGULARITY. THEREFORE, HIS TELEPHONIC REQUESTS DID NOT CONSTITUTE DISCUSSIONS WITHIN THE MEANING OF ASPR 3-805. THESE CANS, WHICH ARE REUSEABLE, HAVE BEEN RETURNED BY THE GOVERNMENT TO EITHER OR BOTH ENSIGN BICKFORD OR BERMITE WHEN EMPTIED ON A CONTINUOUS BASIS DEPENDING UPON WHO WAS PRODUCING THE IGNITERS AT THE TIME A CARLOAD OR TRUCK LOAD OF EMPTIES WERE READY TO SHIP. A TYPICAL SITUATION EXISTED AT BOTH PLANTS AS OF THE DATE OF PROPOSAL SUBMISSION - ENSIGN BICKFORD HAD 1,595 CANS ON HAND, WHEREAS BERMITE HAD MORE THAN ENOUGH TO COMPLETE THE PROPOSED CONTRACT. AS THIS HAS BEEN THE PRACTICE FOR MANY YEARS PRIOR TO ISSUANCE OF THE RFP, HERE INVOLVED, EACH OFFEROR BID ON THE EXPECTATION THAT THE PRACTICE WOULD CONTINUE. PROTESTOR, FOR EXAMPLE, WHEN ASKED, STATED ON THE TELEPHONE, AND CONFIRMED IN WRITING, THAT THE OVERSIGHT WOULD HAVE NO EFFECT ON HIS BID."

THE ARMY'S POSITION IS THAT IT WAS NO NECESSARY TO FOLLOW THE PROCEDURES IN ASPR 3-805.1(A) OR (B) SINCE AWARD WAS MADE ON THE BASIS OF INITIAL PROPOSALS AS PROVIDED IN THE RFP AND IN ASPR 3-805.1(A)(V).

EB'S COMMENT IS THAT ASPR 3-805.1(A)(V) IS INAPPLICABLE TO THIS SITUATION SINCE ARMY DID HOLD SOME DISCUSSIONS WITH BOTH BERMITE AND EB. EB HAS CITED OUR DECISION B-178001, FEBRUARY 14, 1974 (53 COMP. GEN. ), FOR THE PROPOSITION THAT "ANY DISCUSSIONS" AFTER RECEIPT OF PROPOSALS REQUIRES THE CONTRACTING OFFICER TO NEGOTIATE WITH ALL OF THE OFFERORS AND TO ESTABLISH A COMMON CUT-OFF DATE. FURTHER, EB ASSERTS THAT THE CONTRACTING OFFICER'S STATEMENTS THAT THE DISCUSSIONS WERE FOR CLARIFICATION PURPOSES AND THAT THE PRICES OFFERED WERE NOT DISCUSSED ARE SPECIOUS SINCE THE ESSENCE OF THE DISCUSSIONS CONCERNED THE WILLINGNESS OF OFFERORS TO ACCEPT CHANGES IN THE SPECIFIED REQUIREMENTS WITHOUT PRICE REVISION. IN ADDITION, IT IS URGED THAT SINCE EB AMENDED ITS PROPOSAL BY REDUCING THE PRICE THEREIN, THE CONTRACTING OFFICER SHOULD HAVE BEEN ALERTED TO THE POSSIBILITY THAT EB WOULD FURTHER REDUCE ITS PROPOSAL.

WHILE THERE IS NO QUESTION THAT THE PROCURING ACTIVITY CONTACTED THE OFFERORS CONCERNING CORRECTIONS IN GOVERNMENT-FURNISHED MATERIAL SUBSEQUENT TO RECEIPT OF INITIAL PROPOSALS, IT IS EQUALLY CLEAR THAT THE CORRECTIONS DID NOT RESULT IN ANY CHANGE IN THE CONTRACT REQUIREMENTS IN SO FAR AS THE OFFERORS' OBLIGATIONS WERE CONCERNED. WITH RESPECT TO THE BLACK POWDER, KOFFERORS WERE ALREADY AWARE BY THE TERMS OF THE SOLICITATION THAT THIS ITEM WOULD BE GOVERNMENT-FURNISHED, AND THE ONLY CHANGE BROUGHT TO THE ATTENTION OF THE OFFERORS SUBSEQUENT TO RECEIPT OF PROPOSALS WAS THAT THE GOVERNMENT WAS CHANGING THE CLASS OF BLACK POWDER TO BE FURNISHED. WHILE THE SOLICITATION DID NOT STATE THAT THE GOVERNMENT WOULD FURNISH THE ALUMINUM CANS, WE HAVE NO REASON TO DOUBT THAT BOTH OF THE PROPOSALS WERE PREPARED WITH THE EXPECTATION BASED NO PRIOR EXPERIENCE THAT THE AMMUNITION CANS WOULD BE GOVERNMENT FURNISHED.

WE HAVE HELD THAT EVEN IF AN RFP SPECIFICALLY PROVIDES THAT AWARDS MAY BE MADE ON THE BASIS OF INITIAL PROPOSALS, ONCE "DISCUSSIONS" HAVE BEEN INITIATED WITH ONE OFFEROR SUBSEQUENT TO THE RECEIPT OF PROPOSALS, AWARD MAY NO LONGER BE MADE ON THE BASIS OF INITIAL PROPOSALS. SEE 50 COMP. GEN. 202 (1970) AND B-165837, MARCH 28, 1969. WE NOTE THAT IN EACH OF THE CITED CASES THE SUBJECT OF THE DISCUSSIONS HAD A SIGNIFICANT IMPACT ON CONTRACT REQUIREMENTS. IN 50 COMP. GEN. 202, SUPRA, THE AGENCY ACCEPTED ACKNOWLEDGMENT OF AN ADDENDUM WHICH ADDED APPROXIMATELY $3,000 TO THE CONTRACT PRICE AFTER CLOSE OF NEGOTIATIONS; IN B-165837, SUPRA, THE AGENCY EXTENDED THE OPPORTUNITY TO OFFERORS TO MAKE TECHNICAL CHANGES AND PRICE REVISIONS AFTER RECEIPT OF INITIAL PROPOSALS AND A NUMBER OF OFFERORS REVISED THEIR PRICES. IN A CASE SUCH AS THIS WE DO NOT BELIEVE ANY STRICTER RULE SHOULD BE APPLIED IN DETERMINING WHETHER AWARD MAY BE MADE ON THE BASIS OF INITIAL PROPOSALS THAN THE CRITERIAL USED IN RESOLVING WHETHER CHANGES OCCURING AFTER RECEIPT OF BEST AND FINAL OFFERS REQUIRES THE REOPENING OF NEGOTIATIONS. IN THIS REGARD, IN CONSIDERING WHETHER A WAGE DETERMINATION COULD BE INCORPORATED INTO A CONTRACT AFTER RECEIPT OF BEST AND FINAL OFFERS, WE HELD THAT SINCE THIS FACTOR DID NOT AFFECT THE RELATIVE COST POSITIONS OF THE FIRMS CONCERNED, IT WAS NOT AN ABUSE OF DISCRETION FOR THE AGENCY TO DECLINE TO SOLICIT REVISED PROPOSALS. SEE 52 COMP. GEN. 686 (1973). SEE ALSO B-177317, DECEMBER 29, 1972. SINCE THE GFM CHANGES IN THIS CASE DID NOT HAVE ANY IMPACT ON THE CONTRACT REQUIREMENTS OR RELATIVE COST POSITIONS OF THE FIRMS CONCERNED, WE DO NOT BELIEVE THAT IT WAS AN ABUSE OF DISCRETION TO MAKE THE AWARD ON THE BASIS OF INITIAL PROPOSALS.

IN B-178001, FEBRUARY 14, 1971, SUPRA, CITED BY EB, WE CONCLUDED THAT REJECTING A PROPOSAL WHICH INITIALLY WAS DETERMINED TO BE WITHIN THE COMPETITIVE RANGE ON THE BASIS OF ORAL STATEMENTS MADE BY THE OFFEROR DURING THE COURSE OF NEGOTIATIONS DID NOT COMPORT WITH THE ESSENTIAL ELEMENT OF THE NEGOTIATING PROCESS IN 10 U.C.C. 2304(G), WHICH REQUIRES THAT OFFERORS BE GIVEN THE OPPORTUNITY TO SUBMIT REVISED PROPOSALS. HOWEVER, THERE IS NOTHING IN THE CITED DECISION TO SUPPORT EB'S ASSERTION THAT "ANY DISCUSSIONS" REQUIRE THE REOPENING OF NEGOTIATIONS AND THE ESTABLISHMENT OF A COMON CUT-OFF DATE. MOREOVER, SEE ASPR 3 805.1(B) WHICH AUTHORIZES INQUIRIES TO OFFERORS FOR THE PURPOSE OF CERTAIN CLARIFICATIONS AND PROVIDES THAT SUCH CLARIFICATION SHALL NOT CONSTITUTE "DISCUSSIONS" WITHIN THE MEANING OF 3-805. WE BELIEVE THE INQUIRIES MADE IN THIS CASE WERE OF THE NATURE CONTEMPLATED BY THIS PROVISION OF ASPR.

WE HAVE HELD THAT IF A PRICE REVISION FROM ONE OF THE OFFERORS RECEIVED AFTER THE CUT-OFF DATE IS CONSIDERED IN THE EVALUATION, THEN EQUAL OPPORTUNITY FOR ADDITIONAL PROPOSAL REVISION MUST BE EXTENDED TO ALL SIMILARLY SITUATED OFFERORS AND A NEW CLOSING DATE MUST BE ESTABLISHED. SEE B-174492, JUNE 1, 1972 AND B-173597(1), DECEMBER 1, 1971. WE MENTION THIS BECAUSE THE CONTRACTING OFFICER DID NOT SPECIFICALLY REJECT EB'S PRICE REVISION SUBMITTED AFTER THE CLOSING DATE FOR RECEIPT OF PROPOSALS AS A LATE MODIFICATION AS PROVIDED BY ASPR. HOWEVER, IT DOES NOT APPEAR THAT THE REVISION WAS CONSIDERED AS THE DETERMINATION HAD BEEN MADE TO AWARD ON THE BASIS OF INITIAL PROPOSALS AND BERMITE'S PRICE WAS STILL THE LOWEST. IN THE CIRCUMSTANCES, THIS IRREGULARITY DID NOT CONSTITUTE A BASIS FOR QUESTIONING THE AWARD TO BERMITE ON THE BASIS OF ITS INITIAL OFFER. MOREOVER, IN VIEW OF EB'S TELEGRAM TO THE PROCURING ACTIVITY, SENT AFTER ITS PRICE REVISION, ADVISING THAT THE CHANGES IN GFM DID NOT AFFECT ITS PRICE, WE FIND THAT EB'S ASSERTION THAT IT CONTEMPLATED FURTHER PRICE REVISIONS AND THAT THE PROCURING ACTIVITY SHOULD HAVE BEEN AWARE OF THIS, IS NOT SUBSTANTIATED BY THE RECORD.

EB HAS ASSERTED THAT THE AWARD OF THE LARGE QUANTITY OF THIS CONTRACT TO BERMITE WILL RESULT IN BERMITE BECOMING THE SOLE PRODUCER OF IGNITERS. URGES THAT THIS REDUCTION OF COMPETITION IN FURTHER PROCUREMENTS IS NOT IN THE BEST INTERESTS OF THE UNITED STATES.

ARMY ADVISES THAT THE REASON FOR A SINGLE AWARD WAS THAT THE QUANTITY OF 822.450 UNITS IN THIS PROCUREMENT WAS NOT CONSIDERED LARGE ENOUGH FOR AN ECONOMICAL SPLIT BETWEEN THE TWO OFFERORS. WE ARE FURTHER ADVISED THAT IT HAS BEEN DETERMINED, IN VIEW OF THE CAPACITY AND CAPACITY AND CAPABILITIES OF THE SELECTED OFFEROR, THAT ONE ACTIVE SOURCE WILL BE ADEQUATE TO SATISFY MOBILIZATION BASE NEEDS FOR THIS ITEM.

WE HAVE HELD THAT THE DETERMINATION OF THE NEEDS OF THE GOVERNMENT WITH RESPECT TO INDUSTRIAL MOBILIZATION AND THE METHOD FOR ACCOMODATING SUCH NEEDS IS PRIMARILY THE RESPONSIBILITY OF THE PROCURING AGENCY AND THAT, EXCEPT IN SITUATIONS WHERE CONVINCING EVIDENCE HAS BEEN PRODUCED INDICATING THAT THE ADMINISTRATIVE DISCRETION WAS ABUSED, OUR OFFICE WILL NOT CHALLENGE THOSE DETERMINATIONS. 49 COMP. GEN. 463 (1970). PURSUANT TO OUR REVIEW, WE HAVE NOT FOUND EVIDENCE TO ESTABLISH THAT THE ARMY'S DETERMINATIONS THAT IT WAS NO ECONOMIC TO SPLIT THE PROCUREMENT AND THAT THE SOURCE SELECTED WILL ADEQUATELY MEET MOBILIZATION NEEDS WAS AN ABUSE OF DISCRETION; THEREFORE, WE WILL NOT QUESTION THE AWARD OF THE ENTIRE QUANTITY TO BERMITE. MOREOVER, WE NOTE THAT WHILE EB MAY NOT CONTINUE TO BE AN ACTIVE PRODUCER OF IGNITERS, THIS WOULD NOT PRECLUDE EB FROM COMPETING FOR FUTURE CONTRACTS FOR THIS ITEM. IN THIS RESPECT, EB HAS INDICATED ITS AGREEMENT TO CONTINUE CURRENT PARTICIPATION IN THE DOD INDUSTRIAL MOBILIZATION PRODUCTION PLANNING PROGRAM FOR THE ITEMS IN THIS PROCUREMENT.

THE FINAL POINT IN EB'S PROTEST CONCERNS THE RFP PROVISION FOR AN OPTION OF 300 PERCENT OF THE BASIC QUANTITIES, SUBJECT TO CERTAIN ESCALATION FOR MATERIAL AND LABOR COSTS. IN THIS CONNECTION, EB REFERS TO ASPR 1- 1504(A), WHICH STATES THAT OPTIONS SHALL NOT EXCEED 50 PERCENT OF THE BASIC QUANTITY EXCEPT WHEN APPROPRIATE HIGHER AUTHORITY APPROVES A HIGHER PERCENTAGE ON TE BASIS OF UNUSUAL CIRCUMSTANCES. EB STATES THAT IT CANNOT CONCEIVE OF THE UNUSUAL CIRCUMSTANCES THAT WOULD REQUIRE A 300 PERCENT OPTION WHERE COMPETITION IS CURRENTLY AVAILABLE. EB FEELS THAT THIS IS PARTICULARLY TRUE IN THIS CASE WHERE THE OPTION PRICE IS SUBJECT TO ESCALATION AND NOT NECESSARILY TIED TO THE "COMPETITIVE PRICE" ESTABLISHED BY THE PROCUREMENT. IN ADDITION, EB CONTENDS THAT SINCE THE BASIC PRICE UPON WHICH THE OPTION PRICE IS BASED, WAS NOT ESTABLISHED BY PROPER COMPETITIVE NEGOTIATION PROCEDURE, IT FOLLOWS THAT THE OPTION PRICE ALSO IS SUBJECT TO QUESTION. FOR THESE REASONS EB URGES THAT EVEN IF OUR OFFICE SHOULD DECIDE NOT TO RECOMMEND CANCELLATION OF BERMITE'S CONTRACT, OUR OFFICE SHOULD NEVERTHELESS CONCLUDE THAT THE OPTION SHOULD NOT BE EXERCISED.

THE CONTRACTING OFFICER'S JUSTIFICATION FOR INCLUDING A 300 PERCENT OPTION, WHICH WAS APPROVED BY HIGHER AUTHORITY, STATES AS FOLLOWS:

"(1) TO PROVIDE A MEANS OF MAINTAINING AN ACTIVE PRODUCTION BASE BY AWARDING OPTION QUANTITIES THAT MAY BE UNECONOMICAL PRODUCTION RUNS FOR ANY FIRM OTHER THAN AN ACTIVE PRODUCER.

"(2) EXPERIENCE INDICATES THAT THE 2.75" ROCKET PROGRAM IS MULTI NATIONAL AND MAP AND MAS PROCUREMENTS ARE FREQUENT AND CANNOT BE FORECAST WITH ANY ACCURACY.

"(3) ADDITIONAL REQUIREMENTS ARE FREQUENTLY RUSH REQUIREMENTS WITH EXTREMELY SHORT LEAD TIMES FOR BOTH PRODUCTION AND PROCUREMENT."

SINCE WE HAVE NO BASIS FOR CONCLUDING THAT THE FACTORS LISTED IN THE CONTRACTING OFFICER'S JUSTIFICATION FOR THE OPTION DID NOT CONSTITUTE UNUSUAL CIRCUMSTANCES, AND SINCE THERE WAS APPROVAL BY HIGHER AUTHORITY, WE FIND NO VIOLATION OF ASPR 1-504(A), IN THIS CASE. MOREOVER, WE FIND THAT EB'S CONTENTION THAT THE OPTION PRICE IS NOT COMPETITIVE IS WITHOUT MERIT. THE ONLY BASIS FOR THE CONTENTION IS THAT THE OPTION PRICE IS SUBJECT TO ADJUSTMENT FOR ESCALATION FOR LABOR AND MATERIAL COSTS. APPLICATION OF AN ESCALATION PROVISION TO OPTION PRICES IS RECOGNIZED UNDER ASPR 1-1505(B), SUBJECT ONLY TO CERTAIN DETERMINATIONS PRIOR TO EXERCISE OF THE OPTION AND ESCALATION OF THE PRICES. SINCE THE CRITERIA SET FORTH IN ASPR MUST BE MET BEFORE EXERCISING THE OPTION, WE BELIEVE THAT THE GOVERNMENT IS ADEQUATELY PROTECTED AGAINST PAYING AN UNREASONABLE PRICE FOR THE OPTION QUANTITY. IN CONCLUSION, WE HAVE ALREADY INDICATED THAT THE MINOR IRREGULARITIES IN THIS PROCUREMENT DID NOT HAVE ANY MATERIAL IMPACT ON THE EVALUATION OR THE AWARD; THEREFORE, WE DO NOT FIND THAT THE RECORD ESTABLISHES A SUFFICIENT BASIS TO JUSTIFY A RECOMMENDATION BY OUR OFFICE THAT THE AGENCY SHOULD NOT EXERCISE THE OPTION FOR THE ADDITIONAL QUANTITY.